Originally published in the West Volusia Beacon on February 27, 2019.
The story of governmental attempts to help Spring Hill is one of big dreams that don’t come true, of funding that dries up, of plans drawn and never seen through.
The reasons are complicated, vast, and sometimes too hazy in memory to pinpoint.
Among those involved is Gerald Chester, president and CEO of the nonprofit Central Florida Community Development Corporation Inc., headquartered in Daytona Beach.
Chester’s story in Spring Hill stretches back to the early 2000s, a time of great hope in the community for uplifting the consistently poverty-stricken area of DeLand.
Between the early 2000s and 2012, according to city officials, Chester’s company, the CFCDC, was under contract with Volusia County and the City of DeLand to administer redevelopment in Spring Hill.
With Chester at the helm, the Spring Hill Resource Center was created. Today, that center is a popular and well-used community asset. It also is currently facing a crisis in funding because of the unexpected loss of tax revenue from a large retirement center.
Chester had plans to fund the Resource Center without depending solely on property taxes. Those plans were never realized.
Dreams of change
For at least seven years, a 10,800-square-foot commercial building that used to be a nightclub has stood vacant on the southwest corner of Adelle and Mathis avenues, in what could be the commercial heart of Spring Hill.
The property is one of eight purchased by companies run by Gerald Chester, mostly during the time his nonprofit organization was contracted by the City of DeLand to help redevelop Spring Hill.
It was Chester’s vision, he said, to put the properties to work creating income to help pay to run the Spring Hill Resource Center. But Chester’s contracts with the City of DeLand ended in 2012. His organizations still own the properties.
Before Chester’s organization bought 918 S. Adelle Ave. for $111,000 in 2008, the building was a popular, if sometimes controversial, nightclub.
“It was a nuisance,” Chester said.
Purchasing the building was part of the CFCDC’s plan to buy up “nuisance” properties and turn them into economy-boosters.
The organization that ended up with the deed on the former nightclub was a for-profit called Central Florida Community & Economic Development LLC, or CFCED. The CFCED is also owned and operated by Chester.
“The LLC is used for commercial property and the nonprofit, residential,” Chester told The Beacon. “Our overall strategy is to maintain our viability — the riskier properties we don’t touch with a nonprofit.”
Chester’s organization made a stab at finding a new owner with a new business plan for the building, and had a prospect in 2016. A little more than two years later, according to court records, the CFCED and that prospective new owner are engaged in a civil lawsuit, in which the prospective new owner claims the CFCED used his $10,000 deposit to pay property taxes and buy a used truck, and wouldn’t return the money after plans for a sports bar fell apart.
The property remains vacant.
Good has come from the property purchases, too. Of the eight properties Chester’s organizations own in Spring Hill, five are affordable-housing rentals, offered at discount rates to low-income residents.
For a three-bedroom, two-bathroom home, one family pays $650 a month, a massive help to the mother of two who lives there.
“I said ‘Thank you, God,’” the mom told The Beacon.
Volusia County records show that neither the CFCDC nor the CFCED has paid any of the assessments owed on the eight Spring Hill properties since at least 2016 — and, in one case, since 2011.
Most of the money owed is for non-ad valorem assessments, such as those for stormwater, garbage pickup and streetlights, which are not subject to tax exemptions.
Seven of the eight properties are listed by the county as tax-exempt. The vacant lot at 1124 S. Thompson Ave. is the exception. County records show taxes were last paid on that parcel in 2009, the year the property was transferred from Volusia County to Chester’s CFCDC.
The deed on the vacant lot has a restriction: The property is to be used for permanent affordable housing. If not, according to the deed, ownership transfers back to the county.
The lot remains vacant.
Tax exemptions on the other seven parcels may be a problem.
In two cases, the properties are owned by Chester’s for-profit corporation, which wouldn’t qualify for the exemption.
Volusia County Property Appraiser Larry Bartlett said his office made an error.
“We gave them the exemption by mistake,” Bartlett said. “It was a clerical error on our part.”
Because of the similarity of the names of the two companies, the property appraiser never noticed the parcel had been sold to a for-profit corporation.
“Now we noticed it, we’re going to take the exemption away,” Bartlett said.
County records show a full ad valorem tax exemption for the property, which is valued at $81,621. The non-ad valorem assessments were last paid in 2015, the record shows.
There’s another problem — the tax exemptions for the six properties owned by Chester’s nonprofit are contingent upon its 501(c)(3) status. That 501(c)(3) status has been revoked by the federal government.
Loss of federal exemption
In late 2010, the CFCDC was sued by the Florida Department of Agriculture and Consumer Services for failing to register as a charitable organization.
What Chester described as an administrative error would have a ripple effect: Caught in litigation with the state for two years, the CFCDC was unable to produce the certification necessary to file a tax return with the IRS, a source told The Beacon.
The IRS investigated the CFCDC in 2011, according to Chester.
That investigation endangered the nonprofit’s 501(c)(3) status, a designation that is integral to the operations of a nonprofit. Without it, the corporation could no longer apply for grants or receive property- and income-tax exemptions.
Because grant-writing was one of the main functions the CFCDC was supposed to perform for the City of DeLand, in 2012 the nonprofit either withdrew from its contract with the city, according to Chester, or had its contract terminated, according to Assistant City Manager Michael Grebosz.
The CFCDC filed three years of back taxes in early 2012 and was eventually reinstated as a charitable organization by the state later that year, according to the organization’s tax returns.
Three years later, however, the IRS revoked the CFCDC’s 501(c)(3) in May 2015, for failing to file taxes three years in a row.
That should have triggered a revocation of the organization’s property-tax exemption. But first, the company would have had to inform the county.
“As far as I know, we don’t have a system in place to check if 501(c)(3) things are unrevoked,” Property Appraiser Bartlett told The Beacon. “If we made mistakes, we’ll fix them, but if someone withheld something we should have known about, we will hold them accountable.”
As far the revocation of the nonprofit’s tax-exempt status, Chester said that’s all about to be taken care of.
“We just submitted for that — we have to go into review. It was delayed from the government shutdown,” Chester said.
Even if the renewal goes through, it’ll cause a two-year gap for the CFCDC in its 501(c)(3) status. Chester doesn’t anticipate any trouble from that.
“No, it won’t cause a property-tax issue,” Chester said.
Chester still has big dreams. It’s just a matter of time and paperwork, he said, before he’s going to begin again working on redevelopment in Daytona Beach.
“Now it’s a waiting game, so we can be a gangbuster out there,” he said.
If Spring Hill wanted him back, he’d be willing, Chester said.
“I wouldn’t mind working with other organizations there trying to make it work. And you know, it takes time, it’s tiresome,” he said. “It’s hopeful if you get people who are committed good caregivers that can make some things happen.”
“Things aren’t hopeless,” he added.